This year, $276 million was invested across the entire country of Canada in the first quarter, and in 2009 the number was $279 million invested. This is 50 per cent lower than 2008 numbers. Both periods represent the lowest level of first-quarter deal flow since 1996 and the bad news is the trend is still heading south. Pun intended.
With VC activity this low it is very difficult for companies to get the kinds of investment and guidance they need to foster growth. As we have mentioned in many of our previous Clean 15 Series articles, the Canadian government has tried to soften the blow through great support systems like the SDTC and OCETA. However, companies will still need to find alternative means to get the guidance and support needed for market entry and more importantly, market volume.
Many smart companies are turning to licensing deals and leveraging corporate venture where they can to get their world class clean technologies into the market and better their position with investors. If the VC activity continues to fall and many think that trend will continue, there will be an increased move to open innovation, where larger companies lean on smaller, more agile firms for R&D partnerships and cutting edge new innovations. These relationships will need to be mutually beneficial to both the incumbent and the smaller company. Open innovation may also help VCs to make smarter choices about the cleantech companies they invest in. Following potential deals could help to mitigate the risk and differentiate between a really cool science project and a clean technology that has value beyond the wow factor. Read Full Article
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